India’s Emissions Trading Scheme (ETS), set to start full operations in 2025, presents both challenges and chances for industries. It will cover over 1,000 high-emission firms by 2026, creating a market potentially worth INR 50,000 crore per year. The scheme uses tradable credits to encourage emission cuts, shifting from penalties to incentives.

Industries using 40% of India’s power face rising carbon costs, especially with global rules like the EU’s Carbon Border Adjustment Mechanism (CBAM). CBAM could add 20-35% taxes on Indian exports in steel and aluminum, reducing competitiveness by 5-10%. However, the ETS allows companies exceeding reduction targets to sell credits, leading to 7-15% emission drops in covered sectors and cost savings. For high-energy users in chemicals and oil, switching to renewables through captive plants can save 15-25% on bills while generating tradable credits.

Solar tariffs below INR 2 per kWh make renewables a key tool for compliance. This not only hedges against price swings but boosts environmental ratings, unlocking cheaper loans at 1-2% lower rates.

Service providers in auditing and tech can develop monitoring systems, creating new revenue in this growing market.

For lenders, ETS projects offer secure returns, supported by government incentives that cut payback to under 5 years. Without action, climate costs could hit 2.8% of India’s GDP by 2030.

Okaga Renewables helps navigate the ETS with renewable portfolios, like our 200 MW solar hybrids in Karnataka. We deliver emission reductions and credits for IPPs, companies, providers, and lenders to gain an edge.